US stocks plunged in late trading on Friday as credit concerns mounted and the chief financial officer of Bear Stearns said fixed-income markets were “as bad as I’ve seen in 22 years”.

Markets were hit early on when Standard & Poor’s said there was an increased chance of it downgrading Bear’s credit rating. Bear responded with a conference call for investors, during which Jimmy Cayne, chief executive, said all financial institutions were facing “an extremely challenging environment”.